WebGain to exit tools, Oracle to buy TopLink

Java IDE market up for grabs

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WebGain Inc is selling its TopLink Java/database connectivity business to application server wannabe Oracle Corp in a deal that also sees the Java IDE leader exit the tools market,

Gavin Clarke writes

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A WebGain company source told ComputerWire a deal would be announced during the next few days which would see Redwood Shores, California-based Oracle buy TopLink along with 90 engineering, sales and support staff.

TopLink maps between Enterprise Java Beans (EJBs) and relational databases, speeding both application server performance and increasing developer productivity. The source did not disclose the deal's value but said: "We made a lot of money."

The deal will also means WebGain will halt all development and sales of its market-leading IDEs Visual Café and WebGain Studio - the latest version of which is currently in beta. WebGain hopes the IDEs will be picked-up by the open source community, carrying the product forward.

WebGain will instead support existing versions of its IDEs and live off licensing and intellectual property, the source said.

The company has judged competition in the Java tools market to be too fierce, generating low margins, to continue in-house development. More than half of revenues were ploughed into research and development - manned by 120 staff.

"We are going to stop R&D and give that to the developer community. We will continue to license and support contracts and make some money on that. The operation will become a license business," he said.

"It was more efficient to give the IDE away and sell the base product rather than run a 120-person engineering group who weren't doing anything better than the community."

WebGain has approximately 100,000 users and led the market for Java IDEs in 2000. The company had 22% market share in 2000, $44.7m in revenue, placing it ahead of number two Borland Software Corp on 19% market share and $40m according to IDC. The analyst said it would release new figures for 2001 during the next 60 days.

WebGain is believed to have been in internal discussion for several months over how to carry its business forward. The company modeled approximately 40 scenarios but - like all Java tools vendors - has been squeezed by reduced corporate spending power. The source said webGain was in danger of becoming split as an IDE and runtime business - with TopLink - while the majority of research and development went into IDEs.

WebGain's Oracle deal developed after the database giant approached the ISV about a TopLink reseller deal some six months ago. WebGain felt its long-term future was threatened by such a deal, as Oracle was expected to develop its own competitor to TopLink and edge webGain out of the market.

An Oracle spokesperson said she was unaware of any deal and webGain was unavailable for contact at time of going to press.